The Domestic and Foreign Copyright Policies for Promoting the Creative Economy

Earlier this summer, I gave a talk in Seoul, Korea regarding how the United States actually has two copyright policies: one domestic and one foreign. These policies differ both in terms of how they are formulated, and what they say. Although these two policies have started converging, they still aren’t the same.

The talk occurred at a conference on “The Creative Economy and Intellectual Property” hosted by the Korean Institute for Intellectual Property and the Korean Intellectual Property Office. The conference reflected South Korean President Park’s initiative to promote a “creative economy” in Korea, which I suppose is an effort to distinguish Korea from the perceived “imitative economies” of other Asian countries such as China. At the conference, strong intellectual property protection was portrayed by the hosting organizations as critical to encouraging the development of a creative economy.

I was asked to talk about the U.S. government policy for promoting a creative economy. I explained that the U.S. actually has distinct domestic and foreign copyright policies, and explored how they have differed, both in terms of process (how they are formulated) and substance. My conclusion was that the domestic copyright policy promoted a creative economy in the United States, while the foreign copyright policy did not do so abroad.

Process

In terms of process, domestic copyright policy is the result of the interplay among the three branches of government: Congress, the courts, and the Executive branch. Within these three branches, the policymaking is highly decentralized. In Congress, the Senate Judiciary Committee and the House IP Subcommittee have the primary legislative responsibility. Advising Congress is the Copyright Office, which technically is housed within the Library of Congress but has some executive functions.

Within the Executive branch proper, the Patent and Trademark Office has the lead copyright policy role (the head of the PTO is the Undersecretary of Commerce for Intellectual Property), with input from numerous other offices, including the U.S. Trade Representative, the Intellectual Property Enforcement Coordinator, and the Office of Science and Technology Policy in the White House; the International IP Enforcement Office in the State Department; the National Telecommunications and Information Administration and the National Institute of Standards and Technology in the Commerce Department; U.S. Immigration and Customs Enforcement in the Department of Homeland Security; the Solicitor General and the Computer Crimes and Intellectual Property Section of the Department of Justice; and the Institute of Museum and Library Services. The Executive branch influences copyright policy by setting criminal copyright enforcement priorities, filing friend-of-the-court briefs, and lobbying Congress concerning legislation. (Because the President can veto legislation, the Executive branch has significant practical power to influence the shape of legislation.)

Unlike with patent law, no one circuit court has exclusive appellate jurisdiction over copyright law. Thus, twelve different appellate courts interpret the copyright statutes adopted by Congress, often articulating different policy judgments from one another. The Supreme Court eventually resolves serious splits among circuits, but this can take decades.

In contrast to the decentralized nature of domestic copyright policy formation, foreign copyright policy authority is concentrated in the Executive branch. This concentration is highest in trade agreements such as TPP or TTIP. While the Office of the U.S. Trade Representative consults with Congress and other Executive branch offices during the course of such negotiations, at the end of the day, as the White House office responsible for trade agreements, USTR determines the U.S. position on copyright in these negotiations.

In copyright discussions outside of the trade context, WIPO, PTO typically heads the U.S. delegation, and the positions it takes reflect a consensus of the Executive branch agencies. PTO consults with the Congressional committees with jurisdiction, but is not bound by their views. Accordingly, here too, the process is more centralized than in the domestic context.

Substance

There are profound substantive differences between the U.S. domestic and foreign copyright policies. The domestic copyright policy is based on a series of careful balances. The Supreme Court in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd.stated that copyright law maintains a “balance between the respective values of supporting creative pursuits through copyright protection and promoting innovation in new communication technologies by limiting the incidence of liability for copyright infringement.”

But copyright balances far more than art and technology. As the Supreme Court explained in Sony Corp. of America v. Universal City Studios, Inc., copyright law “involves a difficult balance between the interests of authors … in the control and exploitation of their writings … on the one hand, and society’s competing interest in the free flow of ideas, information, and commerce on the other.” Copyright thus balances the interests of authors and society as a whole.

Society’s interest in the free flow of ideas, however, is not simply a matter of encouraging consumer access to information. Rather, as the Fifth Circuit recognized, in the Kern River case, Copyright Act “Congress balanced the competing concerns of providing incentive to authors to create and of fostering competition in such creativity.” In other words, copyright law also balances the interests of existing authors with the interests of future authors.

This balance of competing interests is achieved by a legal framework that provides both strong enforcement and strong limitations and exceptions. The enforcement takes the form of actual damages; statutory damages of up to $150,000 per work infringed; injunctive relief; impoundment and destruction of infringing copies; and criminal penalties in cases involving willful infringement. The limitations and exceptions take the form of works entering the public domain at the expiration of the copyright term; the idea/expression dichotomy; the fact/expression dichotomy; the safe harbors of the Digital Millennium Copyright Act; the first sale doctrine; fair use; and a series of specific exceptions including for libraries, educational institutions, and the print disabled.

Fair use is particularly important in maintaining the balance of interests. It serves as a “built-in First Amendment accommodation[].” Artists and media companies rely upon it to create new works that respond to and transform existing works. Moreover, it provides courts with the latitude to permit new uses enabled by rapidly evolving technologies. As the Department of Commerce’s recent Green Paper on Copyright Policy, Creativity, and Innovation in the Digital Economy says, “The fair use doctrine, developed by the courts and codified in the 1976 Copyright Act, is a fundamental linchpin of the U.S. copyright system.” Underscoring the centrality of balance to the U.S. copyright system, the Green Paper employed the word “balance” 25 times.

Conversely, the U.S. foreign copyright policy historically has not reflected any of these balances. For decades, the U.S. government has sought through international agreements to increase copyright protection for U.S. products sold overseas. In the free trade agreements, ACTA, and TPP, the U.S. consistently advocated for an expansion of rights and enforcement mechanisms, without simultaneously pushing for the limitations and exceptions present in U.S. copyright such as fair use. In essence, the U.S. government pursued an asymmetric export of U.S. copyright provisions. (The one exception was U.S. government support for DMCA-style safe harbors for Internet service providers.)

Moreover, the U.S. government strongly lobbied foreign governments against the adoption of exceptions similar to those present in U.S. law. For example, in the 1990s, the U.S. government actively opposed the adoption of exceptions for software reverse engineering in Japan, Korea, and Hong Kong, even though several U.S. courts had ruled that fair use permitted the copying incidental to software reverse engineering for the purpose of developing interoperable programs.

While this policy of promoting the export of U.S. media and software products by opposing balanced foreign copyright regimes may have made sense (for the U.S.) in the pre-Internet era, it no longer reflects the U.S. national economic interest. The fastest growing sector of the economy – the Internet economy – relies as much on copyright law’s exceptions as on its protections. The vast amount of copying necessary for the operation of search engines, for instance, is permitted in the U.S. by fair use. By forcing other countries to intensify their enforcement of IP rights without also requiring them to adopt the full range of balancing exceptions, the U.S. government has actually subjected U.S. Internet companies to greater risk overseas.

Foreign governments are acutely aware of this divergence between the balanced U.S. domestic copyright policy and the imbalanced foreign copyright policy. Foreign copyright officials study in U.S. law schools and have access to U.S. judicial opinions and policy papers that articulate a balanced perspective. They resent what they see as the hypocrisy in the U.S. foreign copyright policy, and the adverse effect it has on their countries’ economic and cultural development.

Recently, the gap between the domestic and foreign policies has begun to close. In the summer of 2012, the United States proposed the inclusion in the TPP of a provision that would obligate Parties to seek to achieve an appropriate balance in their copyright systems in providing copyright exceptions and limitations for purposes such as criticism, comment, news reporting, teaching, scholarship, and research.

Nonetheless, the gap persists. During the negotiations on the Marrakesh Treaty on copyright exceptions for the print disabled, developing countries proposed language that ensured that countries had flexibility concerning how they implemented the Treaty’s obligations, including through determinations as to “fair practices, dealings, or uses….” This indirect reference to fair use provoked sharp opposition from U.S. rights-holders, which in turn led the U.S. State Department to send a demarche to U.S. embassies, directing them to urge national governments to oppose inclusion of this language. Notwithstanding the demarche, the reference to fair use remained in the Treaty when it was adopted. After the adoption of the Treaty, neither the U.S. rights-holders nor the U.S. government voiced opposition to this language.

A creative economy requires a balanced copyright system in order to flourish. An overly protectionist regime favors existing authors at the expense of new ones. Hopefully the U.S. foreign copyright policy will become more like its domestic copyright policy, stimulating the growth of creative economies around the world.

Jonathan Band is a DC-based attorney whose clients include Internet companies, providers of information technology, universities, library associations, and CCIA. He previously guest-posted on DisCo about Congressional hearings on copyright.

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